Senate President Steve Sweeney (D-West Deptford) is offering a new solution to one part of the pension problem: Allow unions to manage their own public worker pensions.Sweeney introduced the idea Monday during a meeting with NJBIZ’s editorial board.
“I think we need to turn the pensions over to the unions, where they’re responsible for managing it,” he said. “I think that they would be willing to do that if there was a funding source that made the payments.”
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Sweeney said having the public worker unions manage their own pensions would put the unions in a position to succeed — or fail —on their own.
Sweeney says unions, not legislators, would have a better handle on how to manage their workers’ pensions and “should control the future of their retirement.”
“If they screw up the investments, they’re responsible,” he said. “Just because they would manage it, doesn’t mean they’d screw it up. In fact, they’d probably manage it better because there would be no politics in it, because it would be completely removed from politics.”
Sweeney, noting that it was the first time he had publicly voiced the idea, did not offer any additional insight on implementation strategy or plans to formalize the proposal.
Hetty Rosenstein, state director for the Communications Workers of America, New Jersey’s largest public union, was intrigued by the idea, adding that she was in favor of more “genuine oversight” of pension management. But what that would actually look like under Sweeney’s proposal is yet to be seen, she said.
“Without more details, it’s difficult to respond,” Rosenstein said.
Steve Baker, associate director for public relations for the New Jersey Education Association, the state’s largest teachers union, declined to comment without first having more information.
Both the CWA and the NJEA are among a number of unions that have filed lawsuits against Gov. Chris Christie over his intended pension cuts.
A spokesperson in the governor’s office did not immediately return an emailed request for comment on Sweeney’s proposal, but the governor did respond earlier Monday to the notion that his administration gave lucrative pension fund management contracts to companies led by top Republican donors.
Christie called the idea “flat out factually incorrect” at a news conference in Trumbull, Connecticut, where he was campaigning for Republican gubernatorial candidate Tom Foley.
“There’s no appointed people in my administration that make those decisions,” he said. “Those decisions are all made by folks in the Department of Treasury who are career employees. And the appointed folks on the pension board, both Republicans and Democrats, don’t make decisions about individual investments.”
Funding of the pensions for state workers remains the larger problem.
According to a report issued last month by a commission created by Christie to examine the matter, the state is currently looking at $90 billion in combined unfunded pension and retiree health benefit liabilities. As the report notes, that’s nearly triple the amount of this year’s $33 billion state budget.
The issue of future pension funding remains a divisive one. While Christie called for a reduction in benefits at stops along his “No Pain, No Gain” tour this summer, Sweeney remains firm in his desire to see full pension contributions made, as promised back in 2011 when Christie signed bipartisan legislation that scheduled higher payments in exchange for more concessions from public workers.
Following overly optimistic revenue projections and subsequent shortfalls, Christie moved earlier this year to cut roughly $2.4 billion in scheduled pension payments.
“If the governor wants to talk about any kind of compromise or fix, it starts with a pension payment,” Sweeney said Monday.
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